9 Mar
Never one to shy away from even the MOST ARCANE areas of payments… There is a firestorm in payments encryption right now.. SHA-1 is a hashing function (securing data for a counterparty without the use of public/private keys) that has long since been sunsetted by Microsoft, Google and others as “too weak” and “easily cracked”.
9Mar 2016
Short blog. I can’t believe it has been 5 years since I wrote Real Time Money Transfer in US. This week we see rumor that Mastercard is looking to make 1B GBP bid to buy Vocalink. Per my Apple and P2P blog there are 4 primary options for “real time P2P” in US:
Presented yesterday at KBW’s annual Payment Conference.. have a few updates in the rumor mill..
I predicted September of this year for CHP in in previous blog Card Holder Present last month. Issuers don’t like this one bit.. as there is no upside.. Merchants with large numbers of cards on file (Amazon, Google, Paypal, Walmart, …) will not tokenize until they obtain a risk based rate (Companies like Amazon manage fraud down to under 3bps).
Rumor is that one large issuer has been quite vocally against the new CHP rate coming into effect. My guess is that the issuers just funded $60M at The Clearing House (TCH) for them to create a new token utility based upon Bell ID…. and the banks want to use this beyond “faster payments”….
I’m in a network state of mind… We are in the midst of a massive economic transformation and I can’t quite put my finger on it. What influences how consumers and businesses are organized? What is changing? Who creates value? What new domains, networks and markets are being created? Where is margin flowing to and from? The hypothesis from Paul Graham’s Refragmentation blog has been keeping me awake at nights.
“that all these trends are instances of the same phenomenon. And moreover, that the cause is not some force that’s pulling us apart, but rather the erosion of forces that had been pushing us together.” Refragmentation
21 Jan 2016
My favorite blog of the year was written by famed UK computer scientist Paul Graham – The Refragmentation. Paul’s blog aligns very well to the work of 2 Nobel prize winners in economics: Oliver Williamson (2009) and his mentor Ronald Coase (1991). Both were focused on the factors governing the “nature of a firm”. (particularly Transaction Cost Economics). I covered how TCE relates to the sharing economy and the future of collaboration in my August blog Collaboration and the “Sharing Economy”.
If I were to pick the proof point for ‘refragmentation’ and TCE within the payments industry it would be processing. If payments is a network business.. processing is undergoing open access (think MCI/ATT), nodal redesign (think iPhone vs rotary), big data (democratized access), enterprise software (ERP/CRM), and direct sales (amazon) … ALL AT ONCE.
Short Blog
One only has to read “The 5 Worst Stocks in the Dow Jones” to get an idea of AXP’s problems. American Express is one of the world’s top consumer brands, a global bank, 3 party payment network, rewards scheme, a talent powerhouse, …etc.
Update 2022 – this never happened. While the networks have the facilities in VTS/MDES and the new SRC standard with EMVCo.. the rate tier has not taken hold.
As I outline 16 months ago in mCommerce/eCommerce Convergence, there is a new V/MA rate tier coming: Card Holder Present (CHP). CHP is coming by summer 2016 (70% probability), and can be thought of as a remake of what was VBV and MSC in 2006/7 using the new token utilities built for ApplePay.
As I’ve stated before, there are 3 industrys that enable mobile payments: grocery, gas, transit (frequency of use). Given WMT’s scale, consumer loyalty, mobile success, cards on file and acceptance cost efficiencies this is a no brainer. My summary is that they have used their unique assets in a new and innovative way, with superb timing.
2 Dec 2015
Happy ‘After’ Thanksgiving everyone, I’m coming out of my tryptophan coma and thought I would go for a mental stretch. This is a pretty big topic, and I won’t do it justice. Thanks in advance for your comments and perspective. [Note I’m not naming the titles of my reference blogs and used only URLs.]